Lawyers, experts may earn close to $400M from American Airlines bankruptcy

Fees that attorneys and experts will get from bankruptcy proceedings involving American Airlines may total close to $400 million, according to news reports.

The Dallas Morning News reported the amount will be $375 million in fees and $16 million in expenses.

The money will be divided among lawyers, accountants, aircraft-finance specialists and other professionals, USA Todayreported.

The company spent two years in bankruptcy court. It emerged from Chapter 11 protection in December, with a merger with US Airways.

Weil, Gotshal & Manges, a bankruptcy law firm, employed by American Airlines, will get $77.4 million in fees. Debevoise & Plimpton will get $54.1 million. Deloitte Financial Advisory Services will get $36.2 million; Rothschild will get $30.5 million; Skadden, Arps, Slate, Meagher & Flom and Paul Hastings will get $28.9 million and $27.4 million, respectively.

These latest estimates were reported to the bankruptcy judge who is responsible for the American Airlines case, Sean Lane, who is assigned to the Southern District of New York.

Robert Keach, a fee examiner and attorney from Maine, reported to the judge that the lawyers and experts "collectively achieved a remarkable outcome."

“A preference for negotiations over litigation saved more money than any scrutiny of the specialists' fees and expenses," Keach said, according to The Associated Press.

He claimed the attorneys and experts were able to achieve "perhaps the most efficient airline reorganization case on record,"The Wall Street Journal reported.

Keach wants Lane to approve $371.7 million in fees and $16.3 million in expenses. It would cover the costs for 47 professional firms.

In its report, The Dallas Morning News said those recent amounts “don't include an additional $3.6 million in fees and expenses" from other firms and professional groups.

In addition, Keach is likely to be paid $476,519, and his law firm, Bernstein, Shur, Sawyer & Nelson will get $2.1 million, The Journal reported.

“Keach worked with the professionals to trim several million dollars off the bills over the life of the case, according to court filings,” The Journal added. “Reductions stemmed from vague time entries, unapproved overhead costs, excessive meal and hotel expenses, and other factors.”

A hearing on the fees has been scheduled for July 1 by Lane.

The company spent two years in bankruptcy court. It emerged from Chapter 11 protection in December, with a merger with US Airways.

American Airlines’ merger with US Airways was approved by the U.S. Justice Department after a review of antitrust issues. In April, the $17 billion merger was approved by U.S. District Judge Colleen Kollar-Kotelly. It created the largest single airlines in the world, Bloomberg News reported.

Contributing Author

Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...